The total return for KNR Constructions (NSE:KNRCON) investors has risen faster than earnings growth over the last five years

Some KNR Constructions Limited (NSE:KNRCON) shareholders are probably rather concerned to see the share price fall 39% over the last three months. On the bright side the share price is up over the last half decade. Unfortunately its return of 88% is below the market return of 216%.

Since the long term performance has been good but there's been a recent pullback of 6.9%, let's check if the fundamentals match the share price.

Check out our latest analysis for KNR Constructions

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During five years of share price growth, KNR Constructions achieved compound earnings per share (EPS) growth of 33% per year. This EPS growth is higher than the 13% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 4.80.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It is of course excellent to see how KNR Constructions has grown profits over the years, but the future is more important for shareholders. This free interactive report on KNR Constructions' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

KNR Constructions shareholders are down 13% for the year (even including dividends), but the market itself is up 0.9%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 14%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 1 warning sign for KNR Constructions you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Indian exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.